South Korea’s central bank said on Wednesday it plans to cut its interest rate next year due to increased political uncertainty and other downside risks.
In its 2025 monetary policy report, the Bank of Korea (BOK) said it will make additional rate cuts to maintain a moderate pace of inflation growth, as well as reduce negative risks to the economy, Yonhap news agency reported.
“The BOK will take into account increased political uncertainty, strong competition (with global competitors) in major industries (of this country) and expected changes in global trade markets when making price decisions,” the BOK said in a report.
The central bank will strengthen its early warning function to avoid any volatility in the financial markets amid uncertainty involving the country’s risks and economic policies in the new administration of Donald Trump, it said.
The bank also vowed to use measures to stabilize the markets at the right time if needed.
Last month, the BOK suddenly cut the policy rate for the second time in a row to help stabilize the economy.
The bank cut its key rate by 25 basis points to 3 percent, the first rate cut since February 2009, when the country was reeling from the global financial crisis last year.
In October, it cut the rate by 25 basis points to 3.25 percent, the first pivot in more than three years.
Consumer prices, the main gauge of inflation, fell to a 45-month low in October with a 1.3 percent increase from a year ago, staying below 2 percent for the second month in a row.
